Maintaining share of voice is critical for advertisers during a recession, both to stay front of mind among consumers in a downturn, and in order to position their brands in an optimal way for the recovery.
Christian Polman, chief strategy officer at Ebiquity, discussed this subject at an online event convened by the Advertising Research Foundation (ARF), the trade body.
“Market share performance is related to share of voice … That applies in a recession as well,” he said. (For more, read WARC’s in-depth report: Why brands that maintain share of voice in a recession will build long-term equity.)
Polman further noted that not just maintaining but increasing adspend in such periods of disruption can lead to “substantially higher market share” in the post-crisis period.
There is a considerable body of research in support of this claim, with Polman citing the example of a PIMS (Profit Impact of Market Strategy) Database analysis.
According to this research, advertisers that boosted spending levels in a recession gained 1.6 percentage points in market share in the first two years of a recovery.
That figure stood at one percentage point for enterprises that maintained their ad investment, and fell to 0.7 percentage points for the organisations that cut their outlay.
“There will be certain sectors where maintaining spend will be out of the question,” Polman admitted, citing the travel industry as an example.
“But, for those who can afford it, there’s logic in trying to at least maintain spend – if not increasing [it]– when we look at data from the past.”
Polman also cautioned any marketer from seeking to project future advertising investments based on guesstimates of the nature and duration of an expected recession.
“If the recession is really deep,” he proposed, “adspend volumes will come down dramatically. Some people are talking about 20% – an unprecedented downward swing.”
In such a scenario, brand stewards should look only to maintain their share of voice, “which they could do with a lower budget,” with the goal of just securing a higher profile than anyone else in the competitive set.
More broadly, he suggested that the true benefits of increasing or maintaining spend – or the cost of making reductions – will take time to ascertain.
“Typically,” he explained, “it takes up to three years for a lot of the brands to see the full impact of their marketing investments” as registered by complete brand-equity modeling.”
This article first appeared in www.warc.com
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